The health care industry is, in many respects, a knowledge-based industry administered by knowledge workers. There is a need to increase the productivity of knowledge work and knowledge workers in the health care industry.
This is more important given today's health care environment than it was several years ago. There are major legislative, as well as economic pressures driving health care to become more productive. Reimbursements from Medicare, Medicaid and private payors are decreasing.
At the same time, the competitive environment for health care companies is very intense. There are pressures for lower costs as well as greater safety and higher quality of care. Some large national employer groups have banded together and developed initiatives to address the issues of quality, safety and cost. Further, there are other groups such as the Institute of Medicine, which are calling for new patient safety standards.
One of the major recommendations for enhanced quality, safety and lower costs is the use of electronic medical records and computer physician order entry (CPOE) to avoid confusion in ordering medications, diagnostic tests and other procedures and treatments. Although hailed as an excellent approach, this has been extremely difficult to implement in practice. It is estimated that today only 3% of physicians practice CPOE and that most of these implementations have been accomplished with residents or in academic settings in which the physicians are hospital employees. CPOE is very difficult and must be done in a way that adds value to physicians or it will be resisted.
The workflow models and processes that have been developed to implement CPOE have assumed that the physician is an integral part of the health care organization's environment and internal workflow. In some settings, this is not the case. Especially in community settings, the physician is an alliance partner in delivering health care and is not an employee. The physician is working more as an independent contractor. As a result, the independent physician is concerned about delivering quality patient care as well as cost effective care, and although s/he is concerned about the overall productivity of the health care organization, s/he is especially concerned about her/his productivity as an individual worker. In the case of the physician alliance partner, the physician must be concerned about her/his workflow and how it interfaces with the workflow of the organization. However, her/his workflow is not an integral component of the overall workflow, unlike the resident physician or physician employee, rather the independent physician spends only a component of her/his time at a given health care organization. Therefore, a different perspective is necessary.
To successfully implement CPOE and enhance productivity, health care organizations must focus on how to decrease transaction costs in the organization, that is, the costs of searching for, negotiating for, contracting for and administering resources and information. Also, health care organizations must achieve this with a patient-centric, quality focus while not alienating or decreasing the productivity of the major knowledge worker, the physician who is an alliance partner and not an employee.
One framework which accomplishes this is the concept of the “Virtual Value Chain,” a concept discussed by Jeffery Rayport and John Sviokla in their 1995 Harvard Business Review article, “Exploiting the Virtual Value Chain.” The article differentiates the “physical world of resources” from the “virtual world of information” and compares and contrasts the physical value chain of the organization, which delivers the organization's products or services with its virtual value chain, which is the information flow of the organization. It states, “Executives must pay attention to how their companies create value in both the physical world and the virtual world.”
In the physical world of health care, health care organizations must focus on “re-engineering” their processes and workflows to be patient-centric and quality-based. However, the virtual value chain should focus on creating value for all knowledge workers, especially physicians, enhancing productivity by decreasing transaction costs and enhancing quality with better decisions.